MONTEREY, CA, May 29, 2009 (MARKETWIRE via COMTEX News Network) -- Century Aluminum of Kentucky, a wholly owned subsidiary of Century Aluminum Company (NASDAQ: CENX), today announced that due to unfavorable business conditions, it is unable at this time to move forward on a proposed new, long-term power contract for the company's Hawesville, Kentucky smelter.
Century, along with Western Kentucky Energy (a subsidiary of E.ON U.S.), Big Rivers Energy, and Rio Tinto Alcan, has been working for more than five years to negotiate an "unwind" of the existing contractual arrangement between Big Rivers and Western Kentucky Energy (WKE), and to define a new agreement that would provide long-term and affordable power to the two smelters in western Kentucky.
"We are disappointed that we cannot proceed with the transaction at this time," said Hawesville vice president and plant manager Matt Powell. "All parties have been working hard for a long time to create a mutually acceptable agreement. We have consistently supported the transaction based upon the expectation that it would produce a power contract that would support Hawesville's long-term profitability. Current and expected economic conditions, however, have created the perfect-storm -- significant weakness in both aluminum prices and wholesale electric prices. The proposed contract might support Hawesville's viability over the long-term, but the contract's take-or-pay requirement, in its current form, could create financial hardship for the company in the short-term. Regrettably, after discussions with WKE and Big Rivers over the past several weeks, we could not find a solution for mitigating the risk. We will continue to work diligently to secure a long-term power agreement that satisfies the needs of all western Kentucky constituents."
At full capacity, the Hawesville smelter produces approximately 250,000 tonnes of primary aluminum annually from five potlines. As a result of the global economic crisis and depressed aluminum prices, Century curtailed one potline in March 2009. The Hawesville smelter currently receives its electrical power from Kenergy Corp (a member of the Big Rivers system), under a power supply agreement between WKE and Kenergy. Although the current power supply agreement expires at the end of 2010, it does provide the plant with necessary operating flexibility.
Century Aluminum Company, the parent of Century Aluminum of Kentucky, owns primary aluminum capacity in the United States and Iceland, as well as an interest in alumina and bauxite assets in the United States and Jamaica. Century's corporate offices are located in Monterey, California.
This press release may contain "forward-looking statements" within the meaning of U.S. federal securities laws. The company has based its forward-looking statements on current expectations and projections about the future; however, these statements are subject to risks, uncertainties and assumptions, any of which could cause the company's actual results to differ materially from those expressed in its forward-looking statements. More information about these risks, uncertainties and assumptions can be found in the risk factors and forward-looking statements cautionary language contained in the company's Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. The company does not undertake, and specifically disclaims, any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such forward-looking statements are made.
Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:
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Astros Vidarsdottir, Senior Manager-Corporate Finance, NBI hf.
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SOURCE: Century Aluminum Company
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